Tag Archives: sec reporting company

Issuers Listed on National Stock Exchanges Have Audited Financials

Shareholders of restricted stock in SEC Reporting Issuers such as those traded on national exchanges like the NASDAQ and NYSE MKT do not have to worry about this since all SEC Reporting public companies listed on these stock exchanges are required to submit PCAOB audited financials.

Issuers on the OTC Bulletin Board and OTC Markets OTCQB are Audited

Issuers which are currently quoted on the OTC Bulletin Board or “OTCBB” and the OTC Markets OTCQB and OTCQX marketplaces likewise have audited financials, and if they are shown as “current” on OTC Markets, this satisfies the requirement under Rule 144.

Non Reporting Pink Sheets Do Not Need to Be Audited Under Rule 144

Do the financial statements of non-reporting issuers (OTC Markets Pink Sheets) need to be audited in order to meet the “current public information” requirement under Rule 144(c)(2)?

No. The “current public information” requirement under Rule 144(c)(2) does not require the financial statements of OTC Markets Pink Sheets to be audited since PCAOB audits are not required under Exchange Act Rule 15c2-11(a)(5).

Shareholders of Current Shells Cannot Use Rule 144 to Clear Stock

Most shareholders already know restricted stock cannot be cleared under SEC Rule 144 if the Issuer is currently a “shell company.”

An Issuer’s Past Shell Status Does Affect How Rule 144 is Applied

Shareholders holding restricted stock in OTC Bulletin Board (OTCBB) and OTC Markets OTCQB and Pink Sheet companies often wonder if the former “shell status” of the Issuer will affect the free trading status of their shares under Rule 144.

Rule 144 Requires Issuers to Be Fully Reporting For 1 Year

Yes, the Issuer’s former shell status is always important when a securities lawyer performs due diligence prior to drafting a Rule 144 opinion letter.

SEC Reporting Companies Have to Be Fully Reporting for 12 Months

This is because Rule 144 requires the Issuer to file all required SEC reports (10-Q, 10-K and 8-K) for at least 12 months after ceasing to be a shell before a shareholder can clear stock under Rule 144, even if all other requirements are met.

Pink Sheets Have to Be Fully Reporting for 1 Year Following Shell Status

OTC Pink Sheets, which do not report to the SEC, must file all of their Quarterly, Annual and Information and Disclosure Statements with OTC Markets for 1 year after ceasing to be a shell before Rule 144 can be used by a Shareholder to clear restricted stock.

144 Opinions Require Detail Regarding Past Shell Status

Rule 144 Opinions drafted by experienced securities lawyers like Matt Stout always go into detail to document the assets and operations in former shell companies.

It is important to demonstrate clearly that the Issuer ceased to be a “shell company” on a certain date, and to show that the proper post-shell reporting has remained current for the required amount of time.

Shareholders holding restricted stock in current or former shell companies can contact Matheau J. W. Stout, securities attorney at (410) 429-7076 with questions and find more information on OTCLawyers.com.